Eclipse Film Partners v HMRC [2016] UKSC 24 has almost nothing to do with housing law. It was an appeal from the First Tier Tribunal (Tax Chamber), via the UT (TCC) and the CA. It wasn’t even about the substantive issues in the case, rather, it was about who should pay for the costs of the bundles (which cost over £215,000 to produce – more than 700 files in the trial bundle!).
The FTT ordered that the parties split the costs of the bundles. After the trial was concluded, Eclipse asked HMRC for its share of the costs. HMRC promptly applied to set aside the underlying order, arguing that the FTT had no power to make such a costs sharing order. HMRC were successful (including in the Supreme Court), so Eclipse got stuck with the whole costs of the bundle.
One point is, however, of interest to us housing lawyers because the FTT (Tax Chamber) rules on costs and case management are materially similar to those in the FTT (Property Chamber) so that what the SC decided is of use to us (see [1]).
Both the Tax Chamber and the Property Chamber have very limited costs powers (r.10, TC; r.13, PC). They both permit an order for wasted costs or where there has been unreasonable behaviour (there is another rule in the TC to do with complex cases, but we can ignore that). Those powers are the only ones that permit orders for costs, hence HMRC was successful. Making a bundle cannot be said to fall into either category.
However, both the TC and the PC have extensive case management powers (r.5, TC; r.6, PC), including powers to adjourn or to permit amendments. Whilst those powers do not allow for an order for costs per se, the FTT is entitled to say that it will only adjourn (or allow an amendment) on terms that include one side paying costs to the other (although not cited, see the similarly creative approach the SC took in Daejan v Benson). That is potentially a very useful little power for the FTT to have. It is a common complaint in the FTT(PC) that there is no real sanction for late production of evidence. Well, if it leads to adjournment, it seems it can now lead to a cost award as well.
I can’t make sense of how paragraphs 19 and 20 of the judgment are supposed to fit together coherently. The same objection (that Eclipse’s case avoided the provisions for cost assessments in rules 10(6) and (7)) surely applies equally to a direction given on terms as to costs.
Suppose the tribunal gives you an adjournment because you agree to pay the other side’s costs. The other side comes back with an invoice 5 times more than you expected and refuses to negotiate. You refuse to pay. The tribunal can’t activate the assessment provisions because it has not ordered costs, and it has no jurisdiction to turn it’s reliance on your assurance into an order retrospectively, because it could only do that in circumstances in which it could have made an order – this is not one. Does the other side have to sue in the County Court?